The file m-mrk.dat contains monthly simple returns of Merck stock. There are three columns-namely, monthly simple returns,

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The file "m-mrk.dat" contains monthly simple returns of Merck stock. There are three columns-namely, monthly simple returns, years, and months. Transform the simple returns to log returns.

- Is there evidence of ARCH effects in the log returns? Use Ljung-Box statistics for the squared returns with 5 and 10 lags of autocorrelation and 5\% significance level to answer the question.

- Use the PACF of the squared log returns to identify an ARCH model for the data and fit the identified model. Write down the fitted model.

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